To a con artist, cash is king. International scammers have developed a deviously clever way to trick people intosending them cash. The crooks mail out counterfeit checks or money orders and come up with a creative story to get their victims to wire back thousands of dollars.

According to a survey released Wednesday by the Consumer Federation of America (CFA), nearly a third of all adult Americans have been approached with fake check scams and at least 1.3 million have fallen for it.

“They didn’t realize the pitch and the check were both phony until they wired off the money,” says Susan Grant, CFA’s director of consumer protection. She says the average victim gets taken for between $3,000 and $4,000.

Sally Greenberg, executive director of the National Consumers League, puts the yearly loss at $20 to $60 billion a year. Her group runs the Web site fakechecks.org. “These are very persuasive scams that play on people’s vulnerability,” she says.

Here’s another reason so many people get burned by these counterfeit checks: They look legitimate. “They look so real your bank teller can’t always tell it’s a fake,” says Allison Southwick of the Better Business Bureau.

It starts with that bogus check or money order
Why did you get that unexpected check or money order for thousands of dollars? Maybe you’ve won a contest. Maybe you hit the jackpot in a lottery. Maybe it’s payment for a
work-at-home job
. The storylines are varied, but the con always works the same way. You need to deposit the check and wire off most of the money right away.

The CFA survey pinpoints one reason why this scam is so successful. Most people (59 percent of those responding) mistakenly believe that when you deposit a check or money order, your bank confirms that it is good before letting you withdraw the money. Forty percent believed they would not be held responsible if the check or money order turned out to be counterfeit. Wrong!

Many victims tell me they asked their bank if the check “cleared” before they wired the money and were told yes. Here’s the deal: When a bank says a check has cleared, it means you have access to those funds. It does not mean the check is good.

If the check bounces – which could take a few days or many weeks – you are responsible to repay your bank for any of the money you withdrew.

Bogus checks can be used for almost anything. All the bad guys need to do is concoct a story about why they sent you a sizeable check and why you need to cash it and wire them money.

Here are some of the most common fake check scam scenarios:

Prize and lottery scams
“Congratulations!” the letter says. You’ve won a bundle of money in a contest, sweepstakes or foreign lottery – one you never entered. The letter looks official and comes with a check for thousands of dollars. You’re supposed to cash it and wire off the money to pay for outstanding fees or taxes. Don’t do it!

Reality check: You never have to pay to claim a prize. If you’re asked to wire off any money, it’s a scam.
More on this scam
.

Mystery shopper scamYou answer an ad and are accepted as a secret shopper. Your first assignment is to evaluate the MoneyGram payment system at a local Wal-Mart store. The letter tells you to cash the enclosed check – usually between $2,500 and $5,000 – keep a couple of hundred dollars for yourself and use the MoneyGram service to wire off the rest. Don’t do it!

Reality check: Never accept a job that requires you to cash a check and wire money. No legitimate company would ever make you do this.
More on this scam
.

Overpayment purchase scam
You’re trying to sell something that’s fairly expensive, maybe a car or some furniture. So you place an ad in the newspaper or online. Before long you get an e-mail from an eager buyer who is willing to send you a check for more than the asking price. You’re supposed to wire the extra money to a mover, decorator, shipping company or some other non-existent entity. Don’t do it!

Reality check: You’re being set up. No legitimate business transaction involves a check for more than the asking price with the requirement that you wire the difference to some person or company.
More on this scam
.

Other victims
Innocent businesses are also hurt by the fake check scam. Many of these bogus checks use the name, address and bank account number of legitimate companies.

This increases the chance the teller will accept the check. Try to deposit a big check from the El Gordo Lottery and the teller might start asking questions. But a check from Bob’s Auto Supply doesn’t call attention to itself.

“Often businesses don’t even know their checks are being used in these scams until they get angry calls from people who want to know where their prize money is,” says the BBB’s Southwick tells me.

A few months ago,
I warned you
about con artists sending out counterfeit Publisher’s Clearinghouse prize notices – along with fake prize checks. Some of those fake checks listed the payer as Alpine Environmental Services of Stanwood, Wash.

When the bank realized Alpine’s account number had been stolen it locked up the company’s accounts. The company’s manager, Dennis Dutoit, tells me he could not pay any bills for three days until everything was straightened out. “It created a major mess,” he says.

The bottom line
It’s not very hard to protect yourself from these fake check scams. In fact, Carmen Christopher, an attorney with the Federal Trade Commission, was able to sum it up in one sentence. “If you get a check that requires you to wire money – don’t do it!”